Shareholders and the board of directors are two crucial elements of any company’s structure. Both have distinct roles, however they share the same goal to ensure that the company’s success and sustainability over the long run. Understanding these different roles and how they interact is crucial element to ensuring good corporate governance.

The board of directors is an organization of people who are appointed by shareholders to oversee the www.boardroomdirect.org/which-virtual-data-room-should-i-get-for-my-organization-and-why company. They typically meet regularly to establish policies for the overall management of the company and oversight. Additionally they handle the short-term decisions such as firing or hiring employees, getting into an agreement with the provider or signing strategic partnerships, and many other. The primary role of the board is to protect the shareholders’ money by ensuring that the company is running smoothly and efficiently.

There is no legal requirement that directors must be shareholders (indeed the initial directors could be listed in the Certificate of Incorporation or Articles or selected by the incorporator), the directors must have a significant stake in the company. They may be individuals or corporations. The board can comprise any number of members however, many think that nine members is the best. The power of the board stems from its bylaws and voting rights attached to shares.

Anyone can become a shareholder in any publicly traded company by purchasing stock. However, in private companies where there is a shareholders agreement or bylaws, the shareholders could have greater control over who can become a shareholder.